Where the Money Actually Goes: The Expenditure Reality
This is where the debate usually ends — because the numbers are hard to defend.
Major Federal Expenditures (FY25–26)
| Category | Allocation (PKR) |
|---|---|
| Debt Servicing (Total) | ≈ 74.1% of federal net revenues |
| Defense | 2.55 trillion |
| Pensions | 1.055 trillion |
| Subsidies | 1.186 trillion |
| Grants & Transfers | 1.778 trillion |
| Development (PSDP) | 2.869 trillion |
| Total Current Expenditure | 16.286 trillion |
Critical detail:
Domestic debt interest alone accounts for ≈ 87.7% of total interest outlays.
This is a classic debt-servicing spiral:
-
Borrow more → pay higher interest
-
Pay higher interest → collect more taxes
-
Collect more taxes → still borrow more
At this point, taxation is no longer developmental. It is maintenance spending.
Inflation Was Cost-Push — Policy Treated It Like Demand-Pull
One of the most consequential policy errors of the last cycle was misdiagnosing inflation.
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